You cannot squeeze blood from a stone. This saying has never been more pertinent when considering Malaysia’s health care predicament.
For decades, the nation has relied on a tax-funded public health care system that has served the country admirably.
But that model is now reaching its breaking point. The stone is dry. And those who are being asked to bleed are an ever-shrinking minority.
Consider the arithmetic. Malaysia has approximately 2.5 to 2.7 million individual taxpayers actively contributing to the national coffers. This represents roughly 15 per cent of the country’s total workforce.
The remaining 85 per cent – some 14.5 million workers – pay no income tax because their earnings fall below the taxable threshold.
Yet this tiny minority of taxpayers is expected to fund a public health care system that serves a population of 33 million Malaysians. The numbers simply do not add up.
The 60 Per Cent Vision
A former investment, trade and industry deputy minister articulated a vision that directly addressed this structural weakness.
He called for help to create a Malaysian middle class society in which at least 60 per cent of the people earn enough to qualify them to pay income tax.
He said, “The creation of a Malaysian middle class society should be seen as a national mission”.
This is not merely an aspirational statement – it is a recognition that Malaysia’s current tax base is dangerously narrow and unsustainable.
The path to 60 per cent is clear: create jobs that pay better, reduce the portion of unskilled labour, and pursue automation and technological upgrading so that with less labour but more skilled workers, each worker is paid much higher for their work.
The Fiscal Arithmetic Of A Failing System
The Ministry of Health’s (MOH) budget for 2026 stands at RM46.52 billion, approximately 2.4 per cent of the country’s gross domestic product (GDP). This is nearly 10 per cent of total government spending.
There are growing calls for this to be increased to 5 per cent of GDP, a figure more in line with upper-middle-income nations.
But even if the political will existed, the fiscal reality is unforgiving. The ongoing conflict in Iran has sent Malaysia’s fuel subsidy bill soaring to an estimated RM58.4 billion for 2026, nearly four times the RM15 billion originally budgeted.
In response, the Treasury had demanded RM10 billion in operating cuts across government, with the Health Ministry facing a proposed 10 per cent cut, equivalent to RM4.65 billion.
Subsequently, the government did not officially implement a RM4.65 billion health budget cut, stating that the actual operating expenditure adjustment for the MOH was capped at RM500 million, dismissing higher figures and rumors as a misleading technical calculation.
Underfunding of the health care system – with public and private spending comprising just 2.3 per cent and 2.1 per cent of GDP respectively – has led to understaffing and overwork. As an upper middle-income economy, Malaysia should be spending 5 per cent to 6 per cent of its GDP on health.
The MediAsas Mirage
Bank Negara’s official FAQ, published on July 29, 2026, revealed that MediAsas is a “fully underwritten” product—no different from commercial health insurance.
Pre-existing conditions are listed among 35 major exclusions. Mental or nervous disorders are another.
The “no look-back” provision only takes effect after seven continuous years, and even then, claims can still be rejected if the non-disclosure was “fraudulent, deliberate, or reckless”, or if the claim relates to a “Pre-Defined Medical Condition”, such as cancer, organ failure, or major cardiovascular disease.
Furthermore, premiums or contributions for this plan are not guaranteed; the insurer or takaful operator reserves the right to revise the premium by giving a written notice of at least 30 days prior to the policy anniversary date. Subsequently, there have been calls for MediAsas to be scrapped entirely.
MediAsas is not national health insurance. It is a private health insurance product designed by the government, with premiums paid by policyholders and payouts made by insurance and takaful operators (ITOs). It receives no government funding for either premiums or claim payouts.
The Core Structural Problem
Malaysia’s health financing model is fundamentally unsustainable. The 2.7 million individual taxpayers paying for the health care of a 33 million population will not sustain itself any longer.
This is the core structural and financial reason why a National Health Insurance (NHI) scheme is currently unfeasible in Malaysia, but it is also the reason why something must change.
The government’s strategy has been to “nudge” insurers and hospitals toward more reasonable charges. But nudging is not governing. And a race to the bottom is not a strategy.
The Global Evidence
Across Asia and the West, nations that implemented mandatory NHI or social health insurance (SHI) schemes achieved universal coverage while containing costs.
South Korea’s National Health Insurance (NHI) achieved universal coverage in just 12 years through a single-payer NHI system.
Taiwan’s NHI covers 99.9 per cent of the population with remarkably low administrative costs.
Thailand’s Universal Coverage Scheme (UCS), despite its current fiscal challenges, has protected millions from catastrophic health expenditure.
These systems share common features: mandatory participation, community-rated premiums (where the young subsidise the old and the healthy support the sick), and centralised purchasing power that enables governments to negotiate lower drug prices and standardise hospital fees.
But they also share common challenges: ageing populations, rising costs, and the political difficulty of sustaining generosity without bankrupting the treasury.
South Korea’s NHI recorded a 3.9 trillion won deficit in the first quarter of 2026. Taiwan’s NHI faces a projected NT$81.7 billion deficit by 2027. Thailand’s UCS is facing serious financial and operational strains.
The lesson for Malaysia is clear: there is no perfect model. But there are models that are far better than the current fragmentation that leaves the uninsured vulnerable and the insured anxious.
A House Divided
A house divided against itself cannot stand. Malaysia’s health care system is a house divided between public and private, insured and uninsured, healthy and sick.
The MediAsas debacle exposed the limits of voluntary, market-driven solutions. Pre-existing conditions will never be covered under a system designed by insurers for profit. Only a system designed by the public for the public can guarantee universal protection.
The path to reform is fraught with political and fiscal challenges. But the alternative – continued fragmentation, rising inequality, and escalating costs – is far worse.
The patient is the health care system itself. The diagnosis is clear: a failure of solidarity, a deficit of political will, and a reluctance to confront the uncomfortable truth that voluntary insurance cannot deliver universal coverage.
In desperation, many have turned their gaze to a seemingly simple solution: a mandatory NHI scheme, modelled on the successes of South Korea, Taiwan, or Thailand.
The road to hell is paved with good intentions. For all its moral appeal, a mandatory NHI scheme is not merely difficult to implement in Malaysia – it is fundamentally unworkable.
The obstacles are not technical; they are structural, political, and fiscal. And they cannot be wished away by well-meaning policy proposals.
The question is whether Malaysia will continue to patch the wound or finally perform the surgery that is so long overdue.
The creation of a society where at least 60 per cent of Malaysians earn enough to pay income tax is not merely an economic aspiration; it is a national mission upon which the sustainability of the entire health care system depends.
In addition, we must create a viable health financing model to move forward.
Dr Rajeentheran Suntheralingam is a senior consultant urologist and urological surgeon at Damansara Specialist Hospital.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
